Economy

Economy: Weak underlying retail spending in Jul- Retail sales in Jul rose 2.8% (est: 11.4%, prior: 1.3%) to $3.7b in Jul, lifted by a 36.5% surge in motor vehicle purchases.

- Excluding that, retail sales slumped 3.1% (est: -2.8%, prior: -2.5%).
- Sales at supermarkets were resilient (+0.3%), which should translate to stable revenue for operators such as Sheng Siong and Dairy Farm.

Other notable segments:
- Watches & jewellery (-9.6%)
- Food & beverages (-7.5%)
- Recreational goods (-5.6%)
- Medical goods & toiletries (+4.5%)
- Spending at restaurants slipped 0.2%, which could be an indicator for weak sales at restaurant owners like Jumbo Group, Soup Restaurant, Katrina Group and Japan Foods.
- Overall, the gloomy set of retail data would likely continue to cap rental rates for retail landlords.
- Maybank KE prefers Starhill Global (TP: $0.89), followed by CapitaLand Mall Trust (Hold, TP $2.10) and Frasers Centrepoint Trust (Sell, TP: 1.90).